Imaging on the Rise, But Few Banks Paperless in Loan Operations

A survey of 80 community banks found that most use some kind of imaging system.

While imaging is on the rise when it comes to banks managing loan documentation, few are completely paperless, according to a survey of 80 community banks by document imaging provider AccuSystems.

According to the survey, while 70 percent of banks responded that they used some type of imaging system, many also supplemented that with paper-based management, as only 12 percent reported being "completely paperless." Meanwhile, more than 75 percent of banks surveyed reported having "moderately efficient" loan management processes, while 16 percent claimed to have less than efficient processes.

Meanwhile, more than 71 percent of respondents said they believe loan document managements systems are good investments, while only 5 percent
of those surveyed believe such systems are not worth the upfront cost.

When it comes to managing the loan process, financial institutions surveyed generally pointed to internal challenges more so than external. The most common challenges had to do with getting buy-in from senior management, system building, and training staff. Altogether, internal barriers such as these accounted for approximately 70 percent of the biggest issues facing loan management processes, according to the report.

Bryan Yurcan is associate editor for Bank Systems and Technology. He has worked in various editorial capacities for newspapers and magazines for the past 8 years. After beginning his career as a municipal and courts reporter for daily newspapers in upstate New York, Bryan has ... View Full Bio

I think more than challenge, regulation will be a driver in adopting paper-less and loan document management systems. With more regulations coming down the pipe around unfair practices in lending, banks need to look to get automated processes in place to document everything for compliance.

Yes, in other years management types might not have seen the value of investing in imaging systems, but the efficiency and cost savings, not to mention helping to comply with regulation, they provide seem like a good investment.

It's telling that the respondents cite internal issues (lack of management buy-in, etc.) as the biggest impediments to improvements in the loan management process, versus external factors such as regulation or new competition. At least there is recognition that investments in automation and digitization are necessary. At the same time, without those internal improvements, banks won't be able to deal effectively with the external challenges. We know regulation will be more, not less intense, and we know there are a host of new non-bank competitors looking to make inroads into small business and consumer lending. So banks reallly need to pick up the pace here.